Home Appliance Industry of Pakistan

Internship Report

Standard Chartered Bank Pakistan Ltd.

Origination & Client Coverage Whole Sale Banking

Presented by: Ahmad Shahzad Saeed

Presented to: Asad Altaf (Director OCC)

Table of Contents
Executive Summary....................................................................................................................................... 1 Home Appliance Industry of Pakistan ........................................................................................................... 2 Gray Market: ................................................................................................................................................. 2 Segment Selection Criterion: ........................................................................................................................ 3 Over View of Home Appliance industry in pakistan ..................................................................................... 3 Important factors ...................................................................................................................................... 4 Home Appliance Industry.............................................................................................................................. 4 General Purchase Patterns: ...................................................................................................................... 4 Preferred features for Imported & Local Brands: ..................................................................................... 5 Demographics of Top Home Appliances Brands Users ............................................................................ 6 Market Analysis............................................................................................................................................. 6 Air conditioner .......................................................................................................................................... 6 Historical Performance: ........................................................................................................................ 6 Company Wise Analysis ........................................................................................................................ 8 Haier: ..................................................................................................................................................... 8 ORIENT: ............................................................................................................................................... 10 PEL: ...................................................................................................................................................... 12 Dawlance:............................................................................................................................................ 14 Refrigerator ............................................................................................................................................. 16 Historical Performance: ...................................................................................................................... 16 Dawlance (Refrigerators & Deep Freezers): ....................................................................................... 18 Haier: ................................................................................................................................................... 19 Orient: ................................................................................................................................................. 21 Waves:................................................................................................................................................. 23 PEL: ...................................................................................................................................................... 24 Pre Budget Situation ................................................................................................................................... 27 Impact of Budget on Home Appliance Industry...................................................................................... 27

Executive Summary
Over all Home appliance industry is fragmented and is equally divided between local manufacturers and importers. Market in Pakistan is such that big multinational players tend to just penetrate with local joint ventures or opening up its marketing and sales division as in case of Mitsubishi, Samsung with Orient and LG with PEL, and Haier as a subsidiary of global Haier. Reasons behind such strategy are i. ii. iii. Already presence of local established players like PEL, Dawlance and Waves. Not so lucrative market due to easily available smuggled goods. Pie is too small to jump in for MNCs.

More over home appliance industry faced a recession in late 2008 and 2009, but 2010 data shows that it had started recovering, but that time allowed new players like Haier establish well in the market on the account of lack in performance by local players like Dawlance and PEL. The recovery would have been much better if country was not to face floods of 2010. Sales were impacted but as we know rehabilitation and recovery of affected areas is under process which indicates that home appliances are going to be part of these recovery processes, so future of the industry is going to be further brighter.

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Home Appliance Industry of Pakistan

Home Appliance and Electronic goods are the main and integral components of daily life. A user very frequently uses the Home Appliances and Electronic goods. Home Appliances and Electronics goods form an industry, which needs to be faced with favorable policies by the state. Home appliances are generally divided into two segments, White Goods and Black Goods, white goods contain heavy consumer durables such as Air Conditioners, Refrigerators, Deep Freezers and Microwaves where as Black goods contain relatively light electronic consumer durables such as TVs, radios, digital media players, and computers.

Gray Market:
Gray market goods are defined as items manufactured abroad and imported into the country without the consent of the trademark holder. Gray market goods are not counterfeits; however, differences may exist between these goods and those goods produced for the sale in that specific country. Some of these differences may involve warranty coverage or compliance with countrys regulatory requirements. The effect of this parallel system is that similar goods are available in the US at different prices. Normally grey market exists in a country because of smuggling. Pakistan is heaven for grey markets because of easier smuggling routes and high consumer acception. Since grey products are not taxed so they are substantially cheaper than markets other

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legal products. In Pakistan major component of grey market consists of black goods like computers and mobiles.

Segment Selection Criterion:

In pakistan white goods market is more formal, more regularized and more legal as compared to black goods market. As a result companies operating in white goods market are pakistani based or they have formal offices and plants where as if we see at T.V and mobile market, this sector is very informal and many times gray. Even the leagal products of mobile and T.Vs are imported by big importers, so no exact data is available as far as black good market is concerned. In my report I will focus on white goods market since its more formal and reguralized and second reason is because our existing and possible clients are from this segment.

Over View of Home Appliance industry in pakistan

According to the report by Daily Times (www.dailytimes.com.pk), the business environment is highly favorable for investment in home appliance industry of Pakistan. Therefore home appliance industry is getting attention of foreign investors as well. Chinas home appliance giant Haier has established the industrial zone in Punjab, Pakistan which is its second overseas manufacturing base after United States. This is joint venture in home appliance industry between Government of China and the private sector of Pakistan. It is very large and growing business sector in Pakistan. In Pakistani home appliance market, there are two types of companies involved in appliance business those are local and imported manufacturers and marketers. They are engaged in both aspects of marketing that is business-to-business marketing (B2B) and business-to-consumer (B2C) marketing. In business-to-business, the manufacturers sell their products to retailers those are known as dealers. Dealers are responsible for retail selling to the end users. A few of the companies also have their own retail outlets also. Since last few years the manufacturers are facing a competitive and challenging situation in business-to-business relationships due to following reasons.

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Important factors
There are three factors to take into account for home appliance industry in Pakistan. Firstly, the challenging situation has been created by dealers whose profits have been reduced due to certain policies adopted by manufacturers in the last few years. So they are looking forward to new manufacturers entering in the industry. More profits and better services are also being included in their demands. Secondly, the new entrants in the manufacturing industry including manufacturers and importers, either they are local or foreign investors have challenged the domination of existing manufacturers and importers. Thirdly, due to the expansion in market size horizontally and vertically, competitive situation has been increased among manufacturers within the industry. Fluctuating customer requirements and competitive forces are putting more pressure on marketers. They are demanding superior marketing strategy and tactical execution (Anni, I. 2002). According to Peter Cheverton, the relationships between B2B suppliers and customers have become a vital source of competitive advantage. Many companies are moving from traditional marketing towards relational-oriented marketing (Cheverton, P. 2004). Suppliers have acknowledged that improved customer- supplier relationships increase key accounts customer retention and loyalty more successfully (Abratt, R. & Kelly, P.M. 2002).

Home Appliance Industry

Home appliance industry of pakistan include names like WAVES, PEL, Dawlance, Haier, Orient etc. A survey has been conducted on various aspects affecting home appliance industry. Results of the survery are as following.

General Purchase Patterns:

General purchase patterns contain reason for buying, brand preference, purchase preference etc.

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Preferred features for Imported & Local Brands:

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Demographics of Top Home Appliances Brands Users

Market Analysis
Market analysis and major players involve in each product line are as following:

Air conditioner
Air conditioner market is one of the biggest segment in home appliance idustry. Major players involved in Air conditioner market are: Dawlance PEL Waves (Cool Industries) Haier Orient

Company Haier Dawlance PEL Orient Others

Market Share in 2010 37% 23% 10% 24% 6%

Historical Performance:

In 2010, Total units of Air conditioner sold are 259377. In

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2007, it was 370,000 units. So actually market for Air conditioners has shrunk a lot in last 5 years. Industry performance during last 5 years has been

Industry Size
120% 100% 100% 80% 60% 40% 20% 0% 2007 2008 2009 2010 57% 59% Industry Size 70%

In 2010, market was 70% of its size in 2007, but the good thing is that it recovered from even more depressing years of 2008 and 2009.
Company wise market shares from 2007-10 has been following. A.C Market Shares 2007 Haier Dawlance PEL Orient Others 27% 38% 9% 20% 5% 2008 42% 21% 12% 19% 6% 2009 36% 23% 12% 23% 6% 2010 37% 23% 10% 24% 6%

A.C market Shares 2007-10

Haier 38% 27% 20% 9% 5% 21% 19% 12% 6% 42% 36% 23% 23% 6% 2009 37% 23% 24% Dawlance PEL Orient Others

12%

10%

6%

2007

2008

2010

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In 2007 Dawlance was the market leader with 38% of market and also the total market size was the highest in 2007. In very next year Haier took the leading market share with 42% and Dawlance dropped down to 21%. This was the time when Haier was extensively promoting its products. As a result in 2010, Haier is the market leader with 37% of market share, Orient is 2 nd with 24% and Dawlance is 3rd place with 23%.

2007 Haier Dawlance PEL Orient Others 100,000 140,000 35,000 75,000 20,000

2008 89,123 45,450 25,250 40,400 12,000

2009 78,555 50,500 25,250 50,500 13,000

2010 94,796 60,600 26,260 62,721 15,000

Total

370,000

212,223

217,805

259,377

Unit Sales of Air conditioners from 2007 to 2010.

Company Wise Analysis Haier:

Haier was incorporated in 1984 only producing household refrigerators. Haier currently manufactures a wide range of household electrical appliances, 15,100 varieties of items in 96 product lines, and exports products to more than 100 countries. Haier Pakistan is the Pakistan Sales & Marketing division of the international Haier Group, a globally recognized manufacturer of world-class electrical home appliances. The joint venture is between Ruba General Trading Company and Haier Group of China. Haier started efforts to capture market by extensive promotions and other market efforts in 2005. Before the main players were Dawlance, PEL, General and some other privately imported brands. In 2007 it had captured 27% of market share which jumped to 42% in next year. In 2010, Haier is the market leader with 38% market share. In times when actual market has reduced by 30%, increasing its market share by 15% and becoming market leader is a great achievement.

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Month wise Sales of Haier for 2007-10 are given below

Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year End Market Share 2007 1,600 5,000 8,000 26,000 20,000 20,000 5,000 3,000 2,000 1,400 3,000 5,000 100,000 27% 2008 7,844 7,843 7,844 13,474 19,981 18,965 4,210 4,160 578 2,998 692 534 89,123 42% 2009 2,481 5,599 14,880 7,445 18,655 14,657 5,475 4,223 2,838 1,586 523 193 78,555 36% 2010 835 4,536 12,920 17,543 18,700 14,535 3,227 6,500 4,500 3,500 3,500 4,500 94,796 37%

Sales Forecast:

If we graph these sales figures there is a lot of seasonality involve in sales figure which is obviously due to product type, more sales in summers and lesser in winters. On average sales have been around 7500/month.

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Based on this we can predict sales for next 2 years i.e. 2011 & 2012. Using these seasonal ties and some forecasting techniques, forecasted sales come out to be.

Forecasted Sales Unit

Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year End 2011 1,522 4,924 12,971 15,560 18,785 14,882 3,748 5,897 3,952 3,079 2,787 3,489 91,596 2012 1,674 5,416 14,268 17,116 20,664 16,370 4,123 6,487 4,347 3,387 3,065 3,838 100,755

ORIENT:

Orient Group of Companies manufactures a range of consumer electronics products like air conditioners, refrigerators, microwave ovens water dispensers and vacuum cleaners. Orient also holds the assembly and selling rights of Samsung and Mitsubishi electronics in Pakistan. These products are manufactured and assembled at factory established at Multan Road, just 26 kilometers away from the Lahore city centre. It comprises of the manufacturing plant, corporate and sales offices, warehouses, and assembly line for all its products. The factory not only manufactures all of Orient Group of Companies product range, but also assembles Samsung air conditioners, televisions, home theatres and Mitsubishi air conditioners on location. In past 5 years Orient has been able to sustain rather slightly improve its market position and reason behind its success has been Japanese brand reputation (Japanese products are considered to be better in performance in Pakistan) and extensive promotions. In 2007, Orient was the third largest player and over the year due to poor performance by Dawlance, Orient has managed to secure 2nd position in market with 24% market share. Month wise Sales of Orient for 2007-10 are given below

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Historical Sales Orient

January February March April May June July August September October November December Year End Market Shares Sales Forecast:

2007 4500 4500 7500 9750 13500 15750 4500 2250 2250 3000 3000 4500 75000 20%

2008 2400 2800 4000 5600 8400 8400 2000 1600 1200 1200 1200 1600 40400 19%

2009 3000 3500 5000 7000 10500 10500 2500 2000 1500 1500 1500 2000 50500 23%

2010 621 3105 8694 11178 12420 9315 1863 4347 3105 2484 2484 3105 62721 24%

If we graph these sales figures there is a lot of seasonality involve in sales figure which is obviously due to product type, more sales in summers and lesser in winters. On average sales have been around 5000 units/month. Based on this seasonality and trends in sales figures we can predict sales for the future.

Using these we can predict sales for next two year i.e. 2011-2012.
Orient 2011 2012

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January February March April May June July August September October November December Year End Expected Market Shares

2,383 3,834 5,786 7,333 9,865 10,381 2,894 2,083 1,551 1,819 2,102 3,093 53124.75 21%

2,373 3,819 5,763 7,304 9,825 10,339 2,883 2,075 1,545 1,812 2,094 3,080 52912.43 21%

PEL:

Pak Elektron Limited (PEL) is the pioneer manufacturer of electrical goods in Pakistan. It was established in 1956 in technical collaboration with M/s AEG of Germany. In October 1978, the company was taken over by Saigol Group of Companies. PEL is not a very big player in A.C segment and holds market share of just 10%. PEL is also manufacturing LG home appliances under LG license in Pakistan. PEL has been in Pakistan since very long and its presence is very solid with loyal customer base. Historical sales figures and market shares are like:

Historical Sales
PEL January February March April May June July August September October November December Year End 2007 2,100 2,100 3,500 4,550 6,300 7,350 2,100 1,050 1,050 1,400 1,400 2,100 35,000 2008 1,500 1,750 2,500 3,500 5,250 5,250 1,250 1,000 750 750 750 1,000 25,250 2009 1,500 1,750 2,500 3,500 5,250 5,250 1,250 1,000 750 750 750 1,000 25,250 2010 260 1,300 3,640 4,680 5,200 3,900 780 1,820 1,300 1,040 1,040 1,300 26,260

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Market Shares

9%

12%

12%

10%

Sales Forecast:

If we graph these sales figures there is a lot of seasonality involve in sales figure which is obviously due to product type, more sales in summers and lesser in winters. On average sales have been around 2100 units/month. Based on this seasonality and trends in sales figures we can predict sales for the future. Monthly sales and seasonality effect calculated on Crystal Ball.

Based on this method we get future sales prediction for 2011 and 2012. Future monthly sales and expected market share are as following:
Forecasted Sales for 2011-12 PEL 2011 January 689 February 1,713 March 3,762 April 4,613 May 5,213 June 4,194 July 1,092 August 1,933 September 1,348 October 1,074 November 1,052 December 1,295 Year End 27,978 Expected Market Shares 11%

2012 689 1,782 3,913 4,797 5,422 4,361 1,136 2,010 1,402 1,117 1,094 1,347 29,069 11%

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Dawlance:

Dawlance has been present in home appliance market from a very long time and is a very established brand. Dawlance is the 7th most favorite brand in Pakistan (out of 3500 brands). It is among Top 2 Top of mind (TOM) Brands in all product categories. Research revealed that Dawlance is in every 2nd house hold in Pakistan (out of those households which have appliances). Dawlance has been the market leader from last many years and main reasons behind its success have been reliable brand, huge customer base and their brand loyalty, and superior product. Recently their market position has been challenged by Haier and they have lost 7% market in last 4 years. Month wise sales for last 4 years have been following. Month wise sales for Dawlance are as following:

Historical Sales
Dawlance January February March April May June July August September October November December Year End Market Shares 2007 8,400 8,400 14,000 18,200 25,200 29,400 8,400 4,200 4,200 5,600 5,600 8,400 140,000 38% 2008 2,700 3,150 4,500 6,300 9,450 9,450 2,250 1,800 1,350 1,350 1,350 1,800 45,450 21% 2009 3,000 3,500 5,000 7,000 10,500 10,500 2,500 2,000 1,500 1,500 1,500 2,000 50,500 23% 2010 600 3,000 8,400 10,800 12,000 9,000 1,800 4,200 3,000 2,400 2,400 3,000 60,600 23%

*Company faced a huge decline in monthly sales in 2007-08. In only one year company lost more than 17% of its market share.

Sales Forecast:

If we graph these sales figures there is a lot of seasonality involve in sales figure which is obviously due to product type, more sales in summers and lesser in winters. On average sales have been around 6500/month. Based on this seasonality and trends in sales figures we can predict sales for the future. Monthly sales and seasonality effect calculated on Crystal Ball.

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Predicted sales for 2011-2012 are as following:

Forecasted Sales
Dawlance January February March April May June July August September October November December Year End Market Shares 2011 1,037 2,744 6,474 7,967 9,868 9,077 3,310 5,479 4,049 3,210 2,807 2,999 59,021 24% 2012 1,037 2,744 6,474 7,967 9,868 9,077 3,310 5,479 4,049 3,210 2,807 2,999 59,021 23%

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Refrigerator
Refrigerator is the largest product type in home appliance market with around 900,000 units sold in 2010. Major players in this segment are Haier Dawlance PEL Orient Waves
2010 15% 39% 20% 6% 16% 4%

Company Haier Dawlance PEL Orient Waves Others

At the present Dawlance is the market leader with 41% market share with PEL (21%) at 2nd and Waves (17%) in 3rd place.
Historical Performance:

In 2010, total of 890,000 units of refrigerator and deep freezers were sold, this figure was 829,000 in 2007. There was a dip in sales for 2008 and 2009 mainly due to global financial crisis, but it seems like industry has recovered from it and sales are on the move. Graph below explains the total market size.

Historical market shares for all the companies from 2007-10 has been following:

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Historical Market Shares (REF & DF) 2007 2008 2009 Haier 10% 10% 10% Dawlance 46% 46% 43% PEL 20% 20% 22% Orient 5% 5% 5% Waves 15% 16% 16% Others 4% 4% 4%

2010 15% 39% 20% 6% 16% 4%

Market Shares (REF & DF) 2007-10

65% 55% 45% 35% 25% 15% 5% -5% 10% 5% 2007 4% 20% 15% 10% 5% 2008 4% 20% 16% 10% 5% 2009 4% 22% 16% 15% 20% 16% 4% 46% 46% Haier 39% Dawlance PEL Orient Waves Others 43%

6%

2010

Over the years, Dawlance has been the market leader because of its long time presence and hue brand loyalty but its market share has been on a decline and it lost 7% in last 4 years. And most of its market share was taken away by Haier. Haier has been very active since 2005 and their sales are increasing. Waves, PEL and Orient have sustained their market shares. Over All Refrigerator market has been much stable in terms of market shares. Unit Sales of Refrigerator & Deep Freezer
2007 Haier Dawlance PEL Orient Waves Others Total Market Size 79,913 385,086 167,700 39,779 124,867 31,823 829,168 100% 2008 83,312 377,175 167,294 37,437 128,206 31,714 823,374 99% 2009 72,466 321,853 163,315 37,561 119,749 31,881 744,993 90% 2010 131,020 346,414 177,953 52,124 141,023 31,982 890,231 107%

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Company wise Analysis

Dawlance (Refrigerators & Deep Freezers):

Dawlance has been present in refrigeration market from a very long time and is a very established brand. Dawlance is the 7th most favorite brand in Pakistan (out of 3500 brands). It is among Top 2 Top of mind (TOM) Brands in all product categories. Research revealed that Dawlance is in every 2nd house hold in Pakistan (out of those households which have appliances). Dawlance has been the market leader from last many years and main reasons behind its success have been reliable brand, huge customer base and their brand loyalty, and superior product. Recently their market position has been challenged by Haier and they have lost 7% market in last 4 years. Month wise sales for last 4 years have been following.
Dawlance January February March April May June July August September October November December Year End Market Shares 2007 19,498 24,218 36,741 44,330 48,758 52,012 37,822 38,115 19,205 24,218 20,378 19,791 385,086 46% 2008 18,987 27,062 38,274 43,048 47,386 50,523 40,211 37,074 15,249 20,187 19,887 19,287 377,175 46% 2009 10,378 17,297 21,026 36,652 43,301 51,789 31,353 25,785 18,866 23,135 22,865 19,406 321,853 43% 2010 17,790 22,216 32,704 30,534 28,278 31,154 21,596 31,464 33,410 34,960 28,278 34,030 346,414 39%

Future Outlook:

If we graph these historical sales figure and check for seasonal trends, e.g. peak months for sale of refrigerators and Deep Freezers are in summer whereas in winter sale are on a decline. Also we can predict the future sales based on historical figures. With these forecasted sales figures, expected market shares for 2011-12 have also been calculated.

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Dawlance
60,000 50,000 40,000 30,000 20,000 10,000 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Dawlance

Nov-10

Jul-07

Jul-08

Jul-09

Jul-10

Jul-11

Nov-07

Nov-08

Nov-09

Nov-11

Jul-12

Based on this graph sales forecast for 2011-12 are:

Forecasted sales for 2011-12 Dawlance 2011 January 18,857 February 23,549 March 34,666 April 32,366 May 38,129 June 46,489 July 35,592 August 33,352 September 35,415 October 37,058 November 29,975 December 36,072 Year End 401,519 Expected Market Shares 41%

2012 19,989 24,962 36,746 34,308 40,417 49,278 37,728 35,353 37,539 39,281 31,773 38,236 425,610 41%

Haier: Haier Pakistan is the Pakistan Sales & Marketing division of the international Haier Group, a globally recognized manufacturer of world-class electrical home appliances. Haier doesnt have its manufacturing plant in Pakistan, yet it is the highest growing company mainly due to its good products, low prices and effective media campaigns. In refrigerator market, Haiers performance hasnt been as

Nov-12

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good as it is in Air Conditioner market, yet it experienced the highest increment in its market share by 5% from 2009-10. Haiers historical sales for 2007-10 have been like:

Historical Sales
Haier January February March April May June July August September October November December Year End Market Shares 2007 3,614 6,660 9,254 11,351 7,975 4,403 6,923 5,784 6,149 6,475 4,683 6,642 79,913 10% 2008 6,403 9,528 13,081 11,470 11,655 8,083 8,164 3,387 2,414 4,213 2,538 2,376 83,312 10% 2009 2,735 3,474 5,910 8,578 10,116 5,210 6,484 7,060 5,641 6,941 5,071 5,246 72,466 10% 2010 6,424 8,015 12,431 10,684 10,009 11,607 7,236 12,889 13,104 13,846 11,047 13,728 131,020 15%

Future Outlook:

If we graph these historical sales we find less seasonality mainly because it is a new company in the market and sales figures are not stable, also the economic conditions in 2009 and 2010 hurt new companies a lot. On the basis of these historical sales future sales forecasting has been done. Historical and future sales outlook has been shown in graph.

Haier
20,000 15,000 10,000 5,000 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Haier

Jul-11

Nov-07

Nov-08

Nov-09

Nov-10

Nov-11

Jul-12

Jul-07

Jul-08

Jul-09

Jul-10

Nov-12

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Based on these projection future sales figures for 2011-12 and expected market share would be:
Forecasted sales for 2011-12 Haier 2011 January 6,809 February 8,496 March 13,177 April 11,325 May 10,610 June 12,303 July 7,670 August 13,662 September 13,890 October 14,677 November 11,710 December 14,552 Year End 138,881 Expected Market Shares 14% Orient:

2012 7,218 9,006 13,967 12,005 11,246 13,042 8,130 14,482 14,724 15,557 12,412 15,425 147,214 14%

Orient Group of Companies manufactures a range of consumer electronics products like air conditioners, refrigerators, microwave ovens water dispensers and vacuum cleaners. Orient also holds the assembly and selling rights of Samsung and Mitsubishi electronics in Pakistan. Orient is a very small player in Refrigerator market and holds 6% market share in 2010. Over the years it has improved very little with 1% increase in market share in last 4 years despite its individual sales figures improved by 30% since 2006. Historical sales for Orient have been like: Orient Historical Sales 2006-10
Orient January February March April May June July August 2007 1,989 2,387 3,580 4,773 5,171 5,569 3,978 3,978 2008 1,853 2,595 3,707 4,448 4,819 5,189 4,077 3,707 2009 1,236 1,853 2,224 4,448 5,189 6,301 3,707 2,965 2010 2,633 3,159 4,739 4,739 4,212 4,739 3,159 4,739

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September October November December Year End Market Shares Future Outlook:

1,989 2,387 1,989 1,989 39,779 5%

1,483 1,853 1,853 1,853 37,437 5%

2,224 2,595 2,595 2,224 37,561 5%

5,265 5,265 4,212 5,265 52,124 6%

If we graph these historical sales we find less seasonality mainly because it is a new company in the market and sales figures are not stable, also the economic conditions in 2009 and 2010 hurt new companies a lot. On the basis of these historical sales future sales forecasting has been done. Historical and future sales outlook has been shown in graph.

Orient
8,000 6,000 4,000 2,000 Orient

Mar-12

Mar-07

Mar-08

Mar-09

Mar-10

Mar-11

Nov-07

Nov-08

Nov-09

Nov-10

Nov-11

Based on these projections, future sales figures are: Forecasted Sales for 2011-12
Orient January February March April May June July August September October November December 2011 2,790 3,349 5,023 5,023 4,465 5,023 3,349 5,023 5,581 5,581 4,465 5,581 2012 2,958 3,549 5,324 5,324 4,733 5,324 3,549 5,324 5,916 5,916 4,733 5,916

Nov-12

Jul-07

Jul-08

Jul-09

Jul-10

Jul-11

Jul-12

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Year End Market Shares

55,251 6%

58,566 6%

Waves: Waves (Cool Industries Pvt. Ltd) was established in 1973 and grew to a leading Home Appliances manufacturing Company in Pakistan, in a very short span of time. Waves is mainly in Refrigerator and Deep Freezer industry and it has the biggest customer base in the form of corporate clients like PEPSI, Nestle, K&N Foods, Shezan, NURPUR, Dawn Foods and HICO etc. it is the biggest player in Deep Freezer segment with more than 60% market share. Over all in Refrigerator and Deep Freezer market, it is the 3rd biggest player with 16% market share. Historical sales for Waves and its market share have been like: Historical sales Ref & DF for 2007-10 Waves 2007 2008 2009 2010 January 6,890 7,050 5,314 7,778 February 10,079 10,942 8,857 11,265 March 13,825 14,770 11,208 15,518 April 11,104 11,292 10,817 10,688 May 13,646 13,908 13,779 12,030 June 13,601 13,844 15,033 12,068 July 11,193 12,026 10,754 9,885 August 11,840 12,090 10,111 12,758 September 6,243 5,774 6,568 10,725 October 10,079 9,730 10,080 14,175 November 8,830 9,060 9,500 12,030 December 7,537 7,720 7,728 12,105 Year End 124,867 128,206 119,749 141,023 Market Shares 15% 16% 16% 16% Future Outlook:

If we graph these historical sales we find less seasonality mainly because it is a new company in the market and sales figures are not stable, also the economic conditions in 2009 and 2010 hurt new companies a lot. On the basis of these historical sales future sales forecasting has been done. Historical and future sales outlook has been shown in graph.

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Waves
20,000 15,000 10,000 5,000 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Nov-07 Nov-08 Nov-09 Waves

Jul-10

Nov-10

Nov-11

Forecasted Sales for 2011-12

Waves 2011 2012 January 8,244 8,739 February 11,941 12,657 March 16,449 17,435 April 11,329 12,008 May 12,752 13,517 June 12,792 13,559 July 10,478 11,107 August 13,523 14,334 September 11,369 12,051 October 15,026 15,927 November 12,752 13,517 December 12,831 13,601 Year End 149,484 158,453 Expected Market Shares 15% 15% PEL:

Pak Elektron Limited (PEL) is the pioneer manufacturer of electrical goods in Pakistan. It was established in 1956 in technical collaboration with M/s AEG of Germany. In October 1978, the company was taken over by Saigol Group of Companies. PEL is currently the 2nd largest player in Refrigerator and Deep Freezer market with 20% market share. PEL is also manufacturing LG home appliances under LG license in Pakistan. PEL has been in Pakistan since very long and its presence is very solid with loyal customer base. Its market share has been the same over the year at 20%. Historical sales figures and market shares are like:

Nov-12

Jul-07

Jul-08

Jul-09

Jul-11

Jul-12

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Historical Market Shares 2007-10 PEL 2007 2008 2009 2010 January 8,385 8,282 4,851 8,988 February 10,062 11,595 8,085 10,785 March 15,093 16,564 9,702 16,178 April 20,124 19,876 19,404 16,178 May 21,801 21,533 22,637 14,380 June 23,478 23,189 27,488 16,178 July 16,770 18,220 16,170 10,785 August 16,770 16,564 12,936 16,178 September 8,385 6,625 9,702 17,975 October 10,062 8,282 11,367 17,975 November 8,367 8,282 11,319 14,380 December 8,426 8,282 9,702 17,975 Year End 167,723 167,294 163,363 177,953 Market Shares 20% 20% 22% 20%

Future Outlook:

If we graph these historical sales we find less seasonality mainly because it is a new company in the market and sales figures are not stable, also the economic conditions in 2009 and 2010 hurt new companies a lot. On the basis of these historical sales future sales forecasting has been done. Historical and future sales outlook has been shown in graph.

PEL
30,000 25,000 20,000 15,000 10,000 5,000 Mar-07 Mar-08 PEL

Nov-08

Mar-09

Mar-10

Mar-11

Mar-12

Jul-07

Jul-08

Jul-09

Jul-10

Jul-11

Nov-07

Nov-09

Nov-10

Nov-11

Jul-12

Based on these projections, expected sales figures and market shares would be:

Nov-12

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Forecasted market Share 2011-12

PEL January February March April May June July August September October November December Year End Expected Market Shares 2011 9,527 11,432 17,231 16,987 15,243 17,148 11,432 17,325 19,152 19,087 15,243 19,026 188,833 19% 2012 10,098 12,118 18,124 18,219 16,157 18,379 12,118 18,154 20,213 20,074 16,157 20,197 200,009 19%

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Pre Budget Situation

Before the announcement of budget, home appliance industry was on the recovery path from its 2008 & 2009 recession, floods in 2010 and energy crisis. Hence the recovery was a little slow, also imposed FED on home appliances in budget 2010-11 worsened the situation. All this resulted in abnormal increase in prices of appliances with increase of 5000 to 7000 a unit.

Impact of Budget on Home Appliance Industry

Home appliance industry is subjected to various duties and taxes which directly have impact on it cost of manufacturing and selling. Before 2011-12 budget home appliance industry was entitled to 17% GST, 1% FED. Also there are some import duties and special duties on certain types of raw materials. In Federal Budget 2011-12, Government of Pakistan has relieved home appliance industry through various changes in taxes and duties. Changes have been following: 1. Sales Tax has been reduced from 17% to 16%. 2. FED (Federal Excise Duty) of 1% has been taken back. 3. Tariff rationalization on bars, rods and profiles of refined copper and copper alloy. The above mentioned changes have reduced the costs for home appliance industry. These changes will be transferred to end consumer by lowering of selling price, which would in return increase the sales units.

Dawlance reduces prices: After the budget announcement, Dawlance was the 1st company to respond by lowering the prices of its brand by stating that they are transferring the relief to its customers. This is what a news paper had to say on this. Dawlance, the no. 1 home appliances brand of Pakistan has decided to offer reduced post -budget prices with immediate effect. As per the budget 2011-12, the government has provided some relief in terms of sales tax and excise tax on home appliances. The relief will lead to reduced prices of home appliances which are applicable from July 1st 2011 onwards. Yet again proving their reliability, the largest home appliances manufacturer has extended this reduction in taxes through their extensive dealer network to their consumers with immediate effect.

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